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The Finance Ministry on Tuesday raised the coupon rate for new 10-year Japanese government bonds to 0.8 percent from 0.6 percent in May, given that yields on the country's sovereign debt in the market have risen since last month.
In an auction, the No. 329 issue of benchmark long-term bonds drew 6,889.6 billion yen in bids, of which the ministry accepted 2,192.2 billion yen. The debt will be issued on June 20 and will mature on June 20, 2023.
The coupon rate is the interest rate stated on bonds at their issuance. Bond yields move inversely to prices.
It was the first auction for the 10-year debt since Japan's financial markets started to fluctuate widely from late May.
Demand for the Japanese government debt has remained solid as Tokyo stocks have been on a downward trend and the Bank of Japan has pledged to buy more than 7 trillion yen worth of government bonds every month, aiming to push down longer-term interest rates.
Analysts, however, said the sovereign debt market may stay volatile ahead, as the central bank's drastic monetary easing has triggered a large-scale money inflow to financial markets.
The yield on the bellwether 10-year Japanese government bond, which ended at 0.840 percent on Tuesday morning, had briefly surged to 1 percent on May 23, its highest intraday level since April last year.
The 225-issue Nikkei Stock Average tumbled 7 percent on the same day. The index dropped 3.72 percent on Monday from Friday to 13,261.82, the lowest closing mark since April 18. It was the third-largest point fall this year.